ALMATY, Kazakhstan -- Six months on from the launch of the Astana International Financial Centre, Kazakhstan's attempts to open up its capital markets appear to be foundering, with just one listing to date and a resurgence of the existing bourse.

Moreover, doubts over transparency in the country, which the new center was supposed to alleviate, persist as a barrier to foreign investment.

The Astana center was launched to great fanfare in July last year, destined to be a hub for international investment in the region, and to serve as a platform for the privatization of Kazakhstan's state-owned companies. It has its own regulator and a stock exchange, the AIX, which has the backing of international financial giants, Goldman Sachs, the Shanghai Stock Exchange, the Chinese government-owned Silk Road Fund and NASDAQ.

In a bid to address international concerns over transparency, Kazakh President Nursultan Nazarbayev described the Astana center as the region's only exchange "with a special legal regime that will operate based on English Law." It will "guarantee the protection of rights to all investors and businesses," he says on the exchange website, while also offering "tax privileges for up to 50 years" for participants. There will also be "simplified currency, visa and labor regimes."

However it has faced teething problems and a fightback from the country's existing bourse, the Kazakhstan Stock Exchange, or KASE, in the old capital and commercial center of Almaty. 

The new exchange only began trading in November, with the listing of the national uranium producer, Kazatomprom. Two other listings promised for last year -- Kazakhtelecom and Air Astana -- have yet to take place. 

Akhmetzhan Yessimov, chairman of the Samruk-Kazyna sovereign wealth fund that owns state assets, has also slated the Kazakhstan Temir Zholy railway company, Kazpost, and KazMunayGas for privatization on AIX.

But there are questions over how easy it will be to get these privatizations away. The listing of Kazatomprom was later than planned and Kazakhtelecom continues to trade on KASE rather than AIX.

Meanwhile, Samruk-Kazyna has been trying to launch IPOs and SPOs for its most attractive companies under various government programs since at least 2011.

Rasul Rysmambetov, an independent Almaty-based financial analyst, said the new exchange in Astana risked being undermined by excessive government involvement in business, as well as the complexities of developing Kazakhstan's economy.

"As usual, major international projects, like the AIFC, are short-lived in our country, so I suggest we should look at the development of events in three or five years," he said.

KASE, meanwhile, shows no sign of wanting to play second fiddle. The total volume of stocks traded on the exchange doubled in 2018 to nearly $1.6 billion and Kase is now actively internationalizing.

Last month, the Moscow Exchange became a shareholder in the KASE, after agreeing mutual access to trading platforms in October.

Under the deal, the MOEX will acquire a 20% stake in the KASE by the end of 2019 and provide technical and consulting assistance.

"Many Kazakh companies that are interested in raising funds work with us," said Alina Aldambergen, the chairwoman of the KASE. (Photo by Naubet Bisenov)

"We have similar markets and practically identical ranges of instruments traded," said Alina Aldambergen, the chairwoman of the KASE. "Russian investors can [now] operate on the KASE via Russian brokers that hold remote membership."

"Many Kazakh companies that are interested in raising funds work with us," said Aldambergen. "Our clients now have a choice," but much will depend on the cost and compliance requirements of listing procedures, she added.

The older bourse also signed a memorandum of cooperation with the Tashkent Stock Exchange in September, in order to study mutual access to trading floors and dual listing of securities.

"We consider the opening-up of Uzbekistan's market as a good opportunity," said Aldambergen. "This would provide Kazakh investors with more opportunities to invest abroad. And Uzbek companies would have an opportunity to raise capital through the KASE either in tenge or other currencies."

The older exchange has categorically rejected the suggestion by Kairat Kelimbetov, the AIFC governor, that major and medium-sized issuers would want to move to AIX, while KASE could continue working with small businesses.  "The movement from one stock exchange to another takes a lot of effort for delisting and listing the company again on the other exchange," Aldambergen said.

Arguments over the merits of the country's two exchanges, however, fail to address the overall lack of transparency in the country's business environment which could hinder Kazakhstan's ambitions to be a regional financial hub.

Out of 1,075 active joint-stock companies in Kazakhstan, only 122 are listed on KASE. Many are reluctant to raise funds on the stock market due to the disclosure requirements, and most are more likely to revert to bank loans.

"Few companies are ready to show their real revenue," Rysmambetov explained. Many feared that doing so could make them vulnerable to takeover, he suggested. 

That culture could make competing for investors in a global market difficult for both AIFC and Kase, said Sergey Domnin, an expert from the state-run Institute of World Economics and Politics in Astana "The key issue is not whether blue chips will move from Almaty to Astana but what value issuers will get from the AIX compared with London, Hong Kong or Shanghai," he concludes.